Such a tectonic shift in the world
economy
is changing the way the world does business.

Consider this: The
World Bank
estimates that the global middle class will triple to 1.2 billion
in 2030 from 430 million in 2000, and China and India will account
for two thirds of the expansion.

In fact, after decades of unprecedented economic expansion, the
percentage of total households with annual disposable incomes of
$5,000-15,000 is already expected to reach 31.7% in China and 14.6%
in India this year. This number is expected to rocket to 46.2% in
China and 41.1% in India by 2020.

What can these hundreds of millions of brand new consumers afford
to buy?

They will most likely start with basic products that satisfy life's
necessities like soap, toothpaste, band aids and toilet paper.

Who can sell these things to them?

The answer is local companies as well as large multinationals that
possess the scale and wide geographical distribution networks to
stock the shelves. Such companies exist on the Dow Jones
IndustrialIndex .

These companies have deeper pockets than some governments -- and
they know all the tricks. For example, they know how to get the
best shelf space, how to distribute efficiently, how to advertise
in a new market and how to drive out competition. These companies
have become some of the world's most dominant companies by doing
these things better than anyone else for years. Newly established
and still-learning local establishments in emerging market
countries are no match for these well-seasoned goliaths.

Dow stocks for the next decade
Founded in 1837,
Proctor and Gamble (
PG
)
is the world's largest consumer products company, with operations
in more than 180 countries and sales of $79 billion in fiscal 2010.
The company features a huge array of famous brands covering
everything from dog food to cosmetic care products including
Gillette, Bounty, Charmin, Crest toothpaste and Tide detergent,
just to name a few. About 60% of 2010 sales came from overseas and
32% of total company sales came from emerging markets.

How big is Proctor and Gamble?

The company has a
market capitalization
of about $170 billion, which is larger than the
GDP
of many countries. The household products giant has 43 brands with
sales in excess of $500 million a year and 23 products with more
than $1 billion in sales every year. In fact, P&G has an
estimated 4.2 billion customers throughout the world --that's about
65% of the 6.5 billion people estimated to be living on the planet.

The company estimates that it generates the equivalent of $12 in
sales every year for every living person on earth. P&G plans to
ratchet that number up to $14 per person in five years -- primarily
through growth in emerging markets.

While P&G has doubled sales in emerging markets since 2001,
there is still plenty of room to grow. Consider that P&G is the
largest consumer goods company in China, with a
market share
four times larger than its nearest competitor. Yet, China still
only spends about $3 per capita annually on P&G products,
compared to $20 in Mexico and $100 in the United States. P&G
estimates that increasing sales in China and India to the levels of
Mexico would add $40 billion per year in revenue.

P&G forecasts core
earnings
growth of +7% to +9% in 2011. The company also pays a quarterly
dividend
which has increased for 56 straight years. The stock currently
yields about 3.2%.

Johnson & Johnson (
JNJ
)
is the world's largest and most diverse health care company,
selling everything from heart stents to band aids. The company has
been in business over 120 years and engages in the development,
manufacture and sale of health care products through more than 250
operating companies located in some 60 countries and generated $62
billion in revenue in 2009.

J&J is a world leader in three different health care segments:
pharmaceutical, medical devices and diagnostics and consumer health
products. The pharmaceutical segment has several leading drugs
including rheumatoid arthritis drug Remicade. Consumer products
include household staples such as Listerine, Carefree and Tylenol.
J&J has incredibly strong brands, with 70% of sales coming from
products with a No. 1 or No. 2 global market share.

The fastest growing segment of the world's population is 65 and
older -- and older people need more health care. Slightly more than
half of sales are generated outside the U.S., and 26% of first half
2010 sales came from outside of the U.S. and Europe. While first
half sales increased just +2.3% overall, sales in the
Asia-Pacific/Africa regions increased +14%. This also accounted for
17% of total sales, up from 15% in the first half of 2009.

The stock pays quarterly dividends and currently yields about 3.4%.
Dividends have risen for 48 straight years, supported by sales that
have increased for 78 straight years.

Action to Take -->
Both Proctor & Gamble and Johnson & Johnson are cheap now,
selling at price-to-earnings ratios well below their five-year
averages. Both companies have relatively defensive earnings and
strong, growing dividends. Emerging markets add a strong element of
growth to compliment steady
cash flow
elsewhere. Both companies are attractive defensive core holdings at
current prices.

-- Tom Hutchinson

Tom has a 15-year history as a financial advisor with UBS
constructing investment portfolios. Tom's background includes a
NASD Series 7 and 63 certifications. Read more...

P.S. -- There's an analyst with a track record you need to
see. She has an 89% win rate -- remarkable for this market. And she
just keeps picking winners. One of her recent picks shot up +18.2%
in just 13 days. Go here for the details...

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